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Karel De Gucht, the European commissioner for trade, declared this week that the European Union’s biggest-ever anti-dumping case was part of a “fundamental debate” about trading relations with China.

In a thinly-veined warning to Germany, he said “if we in the EU do not stand together on this, then we will lose”.

His comments, made at an event organised by European Voice on Tuesday (28 May), were targeted at member states that have criticised the Commission’s plans to impose temporary, six-month punitive tariffs on Chinese producers of solar panels.

Germany’s economics minister, Philipp Rösler, said on 19 May that punitive tariffs would be “a grave mistake”. The UK’s minister for climate action, Greg Barker, said this Monday (27 May) that he had written to his EU counterparts to urge them to oppose levies. His ministry said that restrictions on Chinese imports would put “the growth of the low-carbon market across Europe at risk”.

The Commission must formally announce its decision by 6 June, nine months into an investigation that will last 15 months. Europe’s imports of Chinese solar panels amounted to €21 billion in 2011, making it by far the biggest trade-defence case that the Commission has ever handled.

According to EU trade rules, a decision on whether to impose tariffs during the course of an investigation is for the Commission to make. When the investigation is completed, five-year tariffs can be imposed, but by member states rather than by the Commission.

Debating the theme “Is the EU still a force for open markets?”, De Gucht told his audience: “What’s wrong about this, I believe, is that member states, already in this stage of the discussion, they want to have a predominant influence on what is happening. I think that this is completely contrary to their own interests.”

He continued: “We all know that China is trying to influence and scare off member states. I think that this not a good habit…but the best protection for the member states is to say that this is the competence of the European Commission.”

The proposal, which was first circulated within the EU’s institutions in April, has come under attack chiefly from ministers in Germany, Europe’s biggest solar market and Europe’s chief exporter to China, and from the UK, a champion of open markets.

Protectionism allegations

Within the solar industry, opponents of retaliatory tariffs base their case on the argument that punitive measures would shrink the solar market and therefore harm the EU’s own interest. However, the Chinese government and media routinely portray this trade-defence measure as protectionism, prompting German Chancellor Angela Merkel to say, after meeting Chinese Premier Li Keqiang on Sunday (26 May), that “protectionism is not the answer to globalisation”. She did not refer to the solar case specifically.

“It is interesting that no one is putting into question whether they [Chinese producers] are dumping,” De Gucht said of the Commission’s critics.

The Commission is also investigating whether subsidies provided by the Chinese government to the Chinese solar industry amount to an unfair trade practice.

But De Gucht placed the case in a wider framework, of overall Chinese industrial policy. “What [this case] is about is whether or not they have to respect a certain number of disciplines, a certain number of rules and conventions that add up to fair competition. It is whether we can accept that they can dump as they wish.”

Some in the European solar industry have suggested that dumping is largely a matter of sales of stocks by companies that are collapsing as China’s solar industry consolidates. However, De Gucht indicated that Chinese producers’ practice of selling below cost on foreign markets followed a pattern set by the Chinese government.

Dumping, he said, was “happening in a number of industrial sectors and it is very easy to find them: you read the last five-year plan [set by the Chinese government] and you can identify them, and it is in those sectors that it is happening”.

On 15 May, the Commission warned China that it is prepared to impose sanctions on two telecoms equipment-makers, Huawei and ZTE Corp, if the Commission concludes that they received illegal subsidies or dumped their products on the European market.

De Gucht, who later indirectly referred to China as “our fiercest competition on almost all our markets”, said: “Member states should realise that when they try to weaken the European Commission, first of all they are weakening themselves.”